Buying stuff on a credit card is so easy until you get the bill.
Everybody’s excited about Amazon’s new data center in Madison County. But we won’t be happy when we get the $1,089 annual bill. That’s $14,161 overall per Entergy customer over the life of the project.
The project was slated to be $10 billion but now it’s increased to $16 billion. That’s no surprise given that the Mississippi legislature and the Governor have given Amazon a blank check to buy electricity at low rates.
How big is that blank check? Hard to calculate given the total secrecy surrounding this project, but the number can be deduced.
A $16 billion data center will consume about 1.6 gigawatts of electricity. At current Mississippi electricity rates, Amazon will use about a billion dollars in electricity per year.
Nobody knows what kind of discount Entergy will give Amazon. Normally, this is regulated by the Public Service Commission (PSC). But the state legislature exempted the Amazon deal from the oversight of the PSC. And the legislature allowed information about Amazon’s negotiated rate a secret. And the legislature repealed Entergy’s restriction on raising electricity rates no more than four percent per year.
There’s more. All of Entergy’s construction related to the data center is exempt from bidding laws. No matter how much Entergy spends, it’s allowed to be reimbursed all its costs plus ten percent.
How does Entergy get reimbursed? By raising rates on everybody else. No matter how much Entergy spends, it makes 10 percent. The horror of the Amazon project is there is no limit on how much can be spent, forever. Amazon and Entergy can just keep building this project out forever and pass the bill on to the 384,000 Entergy residential customers and its 75,000 business customers.
We don’t know what special deal Entergy negotiated with Amazon to get them to come to Mississippi. Let’s assume that Amazon, who will be by far Entergy’s biggest customer, ends up paying half of the residential rate. That equals an annual subsidy of a half billion dollars a year. It could easily be double that.
Average that half billion dollars a year by Entergy Mississippi’s 459,000 customers. That comes to $1,089 per year paid by Entergy’s small customers so that Amazon and Entergy can have a blank check to build its data center and related power plants. That’s every year, for decades.
I don’t know about you, but I have no desire to pay an extra $90 a month so that Amazon can build a big data center in Madison County.
I guarantee you Entergy, and its government backers, will shout and cry that these calculations are incorrect, but I’ll have a good response ready for them: Tell us what the actual numbers are. Why is this all top secret?
All of this is nothing new. The state legislature and the Governor get all excited about a new development project for which they can claim credit. The corporate execs bamboozle our politicians. It’s like taking candy from a baby. It’s all done in just a days-long special session in secret. The legislators usually have no idea what’s in the 300-page bill but they are happy to be in the photo op.
Here’s what’s in the 300-page bill:
1) No oversight by the Public Service Commission.
2) No disclosure.
3) No limit on what rate Entergy charges Amazon.
4) No bidding process.
5) No deadline for completion of the project or what constitutes the project. New construction can go on forever.
6) Elimination of the max four percent hike in electricity prices.
Is it any wonder the project ballooned from $10 billion to $16 billion in a matter of months? Why not $25 billion or $100 billion? No matter how much they build, it’s cost plus ten percent. The more they spend, the more they make. Amazon gets dirt cheap rates and the average Mississippi household picks up the bill. For low income households, of which Mississippi has many, an extra $1,000 a year is disaster.
Sorry if that dampers everybody’s enthusiasm for the massive Amazon data center, which will produce 1,000 jobs, mostly people hired from outside our state.
On a per job basis, this sets a new record, $500,000 per job, paid by you and me and all the other Entergy Mississippi customers.
Many states have a special agency to advocate on behalf of the ratepayers in addition to a public service commission. Not only does Mississippi lack such an advocacy agency, but our legislature banned the PSC from having anything to do with the Entergy-Amazon sweetheart deal.
How good is this for Entergy? Check out its stock price, up 60 percent since the Madison County Amazon data center project was announced.
Here’s another way to compute how much Mississippians are going to get hammered by the Amazon deal: Entergy’s total stock capitalization was $22 billion when the Madison County Amazon deal was announced. Today, Entergy’s stock capitalization is $35 billion.
Entergy’s also involved in a big Louisiana data center project, so let’s attribute half of the stock increase to the Madison project.
That means the stock market figures Entergy is going to make $6.5 billion off its Madison County Amazon data center deal. That matches my previous calculations based on data center energy consumption. Guess who's pocketbook that money’s coming from: mine and yours, in the form of utility bill increases.
This makes the Madison County Amazon boondoggle as big as Kemper. That’s $14,161 per Entergy Mississippi customer paid over about 15 years.
Who exposed Kemper, saving Mississippi Power ratepayers $5 billion dollars? It was a team effort by Jackson non-profit Bigger Pie, headed by Kelley Williams, and many other concerned citizens such as Hattiesburg’s Thomas Blanton, Charles Grayson (Bigger Pie emeritus director and the brains), Ashby Foote, Bruce Deer, Forest Thigpen and others.
Who is clanging the alarm about the Madison Amazon data center? Bigger Pie and many of the same crew. Mississippi should pay attention to them.
You can read Kelley Williams’ column opposite this page or, if you’re reading on the web, just do a search for his name. As usual, he’s dead on. One of the smartest men I have ever met. Try to name another person who has saved $5 billion for other people. Brandon Presley, former chairman of the PSC, has given Kelley credit for this amazing achievement on numerous occasions. That’s bona fide. That’s gravitas.
As usual, Mississippi was late to this game. The Big Tech overlords saw us coming a mile away. Other states are experiencing massive rate increases and now realize they got screwed. No problem. Big Tech still had virgin ground in Mississippi and we fell for it. All we had to do was a bit of research.
This will be yet another painful lesson for us on the pitfalls of corporate favoritism at the expense of the ordinary citizen.
